Western Digital has cashed out its Milpitas office, R&D and manufacturing campus for $192.5 million, through a sale and 16-year leaseback deal with Blue Owl Capital.
Through an affiliate, the San Jose-based computer storage maker sold the five-building property at 901, 951, 1001, 1051 and 1101 Sandisk Drive, the Silicon Valley Business Journal reported. The buyer was Blue Owl, based in New York.
As part of the deal, Western Digital signed a lease with Blue Owl for the 37-acre site that runs through 2039.
Blue Owl, which focuses on such leaseback transactions, paid $332 per square foot for the five buildings south of KLA’s headquarters and east of Cisco Systems’ Milpitas campus. According to Reuters, the firm has $138.2 billion of assets under management.
The Milpitas campus was built between 1992 and 1995 and has 580,322 square feet of offices, according to Reonomy and Commercial Cafe.
The site formerly served as the headquarters of flash-drive maker SanDisk. Western Digital acquired the campus in 2016 during its purchase of SanDisk for $19 billion. The campus now includes office, research-and-development and manufacturing plants.
Such leaseback deals provide companies a chance to free cash that’s tied up in real estate, and can provide a better way to raise funds than selling stock or issuing debt, especially during times of higher interest rates, or when a company’s stock is down, according to the Business Journal.
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Western Digital stock price rose 37 percent this year, but is down 43 percent from a high in April 2021, according to Yahoo Finance. Its market cap is nearly $14 billion.
The company posted a $1.3 billion loss in the fiscal year that ended June 30. It had about $2 billion in cash, after its operations burned through $408 million and it spent another $821 million on property and equipment.
Western Digital has $1.1 billion in notes coming due next year and expects to pay the IRS $523 million in the current quarter to settle an outstanding tax bill, according to its annual report.
In addition to its Milpitas campus, it also owns its office headquarters at 5601 Great Oaks Pkwy in San Jose.
— Dana Bartholomew